Gold prices slipped on Wednesday as a firmer US dollar weighed on the precious metal, while investors awaited minutes from the Federal Reserve’s September meeting for clues on the path for interest rates.
Spot gold fell 0.8% to US$4,130.37 an ounce by 2.27pm Malaysian time, while US gold futures declined 0.7% to US$4,157.00.
The dollar index gained 0.3%, making gold more expensive for holders of other currencies. Higher interest rates also tend to reduce the appeal of non-yielding assets such as gold.
Recent comments from Fed officials have kept the prospect of further rate increases alive. San Francisco Fed President Mary Daly said the need for additional hikes would depend on whether factors driving inflation prove temporary or persistent, while Kansas City Fed President Jeff Schmid said rates still need to rise further to bring inflation under control.
Traders are pricing in an 88% probability of a rate hike by December, according to the CME FedWatch tool, although softer economic data have reduced expectations for an October increase.
Against this backdrop, RHB Research expects COMEX gold to remain under pressure despite its recent consolidation and has retained its short position on the commodity.
RHB said COMEX gold rebounded from the US$4,150 support level on Tuesday, after trading between a low of US$4,130.70 and a high of US$4,212.40 before closing at US$4,187.10.
The research house said the latest price action suggests immediate support has formed at US$4,150, with gold potentially rising towards US$4,300 in the near term.
However, the bearish Marubozu formed on September 28 remains intact, keeping downside pressure on the commodity. RHB said its overall technical setup remains bearish as long as COMEX gold trades below the US$4,400 resistance level.
It maintained its short position initiated at US$4,284.80, based on the September 23 closing price, with a stop-loss level at US$4,400.
RHB placed immediate support at US$4,150 followed by US$4,000, while resistance is seen at US$4,300 and US$4,400.
Separately, delegates at the London Bullion Market Association’s annual conference forecast that gold could reach US$5,013 an ounce over the next 12 months.
China’s central bank also extended its gold-buying streak to 23 consecutive months in September, according to official data.
Other precious metals weakened alongside gold, with spot silver down 1.9% at US$60.54 an ounce, platinum easing 1.3% to US$1,679.20 and palladium losing 1.5% to US$1,154.35.
